Lib Dem ministers are pushing for the Coalition to impose more taxes on the better-off. Vince Cable, the Business Secretary, yesterday hinted at a tax on land values that would hit big landlords.

The Lib Dem proposals are not official Government policy, but the party is expected to push them in negotiations with the Conservatives next year to decide on the Coalition’s programme for the second half of this Parliament.

Researchers working for Nick Clegg's party have drawn up proposals for sweeping reforms of local government finance, aimed at making wealthier people pay more.

“Those who can afford to pay should make a greater contribution,” the paper says.

It adds that the current system of council tax should be replaced with new rules including “a revised form of property taxation to make it more efficient (through basing it on undeveloped land values), targeting wealth”.

The Lib Dems have a long-standing commitment to give councils more control over local tax rates.

However, the policy paper says that even as councils get more financial freedom, they should also face rules to transfer money from richer areas to poorer ones.

A reformed local government finance system would include an “equalisation system to shift resources from the wealthiest to the neediest areas,” the report says

Lib Dem researchers have even identified the 68 English council areas that would be “net contributors”, paying more tax to support poorer areas.

The paper does not name those areas, but suggests that they are mostly the affluent suburbs.

“Areas with high revenues but also high needs (e.g. city centres) would probably not be net contributors whereas wealthier suburban areas might contribute more from small revenue bases,” it says.

As well as taxing property values, the Lib Dem paper says councils should have the right and ability to raise “additional taxes” to fund specific services and costs.

For example, the paper suggests a” small per drink surcharge in town centre bars and pubs, borne by drinkers themselves”.

The revenues from such a tax could “offset additional policing and health costs that drinkers impose on councils, and therefore residents, in many towns and cities.”

The paper, Local Government Finance Policy - Consultation Paper 103, will be debated at the Lib Dem conference in Birmingham next month.